Bridging the Gulf: UAE-India CEPA Promoted a Favourable Environment for Startups to Thrive in Both Countries

Why in News?

• Shaped over a millennium of culture and economic engagement around the Indian Ocean network, today India-UAE relationship has reached beyond economic cooperation.
• This partnership reinforces the UAE’s position as an economic hub for India to undertake sustainable and diversified growth through the UAE's strategic location at the intersection of global trade.

 

Background of India-United Arab Emirates (UAE) partnership

• The India-UAE partnership started with the trade of traditional items. Oil trading further strengthened this relationship.
• The relationship was formalised after the creation of the UAE Federation in 1971.
• The partnership accelerated in the 1990s after India liberalised its economy and started working on exports to the UAE and other countries.
• Today, UAE is India's third largest trading partner.

 

The Comprehensive Economic Partnership Agreement (CEPA)

• Building on mutual enterprise and a positive outlook on economic cooperation, India and the UAE formulated CEPA.
• CEPA is a full and deep Agreement signed on 18 February 2022 which came into existence on 1 May 2022, with an aim of taking bilateral trade to US$ 100 billion within 5 years.
• It commences a new chapter in the shared history, unlocking greater trade volumes and improved mutual access to markets and stimulating a wide range of economic, industrial and investment opportunities.

 

Advantages of CEPAto India and the UAE

• Unleashing the spirit of entrepreneurshipthat exists in both countries.
  • It is an opportune moment for India’s dynamic startup ecosystem, its unicorns and innovators, to explore growth and diversification into the Emirati market, and from there to the Middle East, Africa, and Europe.
  • Enabling ecosystem of investors and fellow entrepreneurs, the India-UAE Startup Bridge will also enable them to attract investment from venture capitalists and angel investorsand strengthen their position in the global market.
• Inspiring innovators and investors, catalysing SMEs, startups, and India Inc alike to make decisive inroads into new markets.
• A strategic catalyst in addressing vital developmental challenges. Giving a trade lens to tackle issues as diverse as energy and food security, agriculture, and sustainability.
• It adds greater Strategic importance, dueto the presence of India and the UAE in regional blocs and multi-laterals such as the I2U2 (Israel-India- UAE-USA) and UFI (UAE-France-India).

CEPA’s role as a Growth Engine for India-UAE Bilateral Trade

• The Bilateral Trade between India and the UAE: Trade has increased from US$ 72.9 billion (Apr 21-Mar22) to US$ 84.5 billion (Apr 22-Mar 2023) registering a year-on-year increase of 16%.
• Role played by CEPA in the goods domain:
  • The UAE eliminated duties on goods corresponding to 99% of imports from India.
  • Number of Preferential Certificates of Origin (COOs) issued under the CEPA increased from 415 in May 2022 to 8440 in March 2023.
• In the services domain
  • Broader and deeper commitments have been taken across all the sectors and modes of supply.
  • Out of the 160 services subsectors, India has offered 100 sub-sectors to the UAE and the UAE has offered 111 sub-sectors to India.

 

Academic and Cultural Cooperation Between India-UAE

• Academic cooperation
  • The UAE looks forward to the opening of the IIT-Delhi campus in Abu Dhabi next year.
  • Positive outcomes are expected from the MoU in academic cooperation signed between Anwar Gargash Diplomatic Academy (AGDA) and O P Jindal Global University.
• Cultural cooperation
  • In September last year, the UAE and India signed an MoU to establish the Emirati India Cultural Council.
  • Recently, the Louvre Abu Dhabi paid homage to Bollywood by unveiling its first exhibition of the year; ‘Bollywood Superstars: A Short Story of Indian Cinema’.
  • For the Emirati audience, the exhibition not only showcases the depth and richness of Indian art and civilisation through its films, but also illuminates our shared roots, common values, and cultural connections.

 

Conclusion

• The UAE-India CEPA and strong people-to-people multicultural fabric have created a highly favourable business environment.
• Given the significant increase in bilateral trade, particularly in exports of Indian goods and services, CEPA will have a positive impact on other key macroeconomic variables such as GDP and employment.
• These initiatives give a glimpse of the deal’s fullest role as the heart of strategic alignments and common interests, leading both nations to build competitive, resilient, sustainable, and vibrant economies.

 

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Q) What's the difference the concept of Atmanirbhar Bharat vs. Free Trade Agreements (FTAs)?

The two concepts are not contradictory rather complimentary to each other. Atmanirbhar Bharat does not mean self-containment, isolating away from the world or being protectionist. Rather it’s about getting our act together to improve domestic production of finished goods, gain from better integration with the global value chain and ensure fair trade. Atmanirbhar Bharat Abhiyan together with a calibrated and balanced free trade agreement would build a self-reliant India that would focus not just on boosting domestic manufacturing but also on making the country a part of the global value chain. 

 

Q) What is the definition for "originating products" under CEPA? 

The goods which are wholly obtained or produced entirely in the party country or if the product is not wholly or partly produced in the country then it has to satisfy stringent conditions which are as follows: 

1. The good has a qualifying value content of not less than 40 per cent. 
2. All the non-originating materials used for production have to undergo a change in tariff classification at the four or six-digit level.

 

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Source: The Indian Express